There’s a ‘dirty open secret’ in retail, and it’s killing Macy’s and Gap

It’s getting harder than ever to persuade people to visit physical stores with the rise of online shopping, Forbes contributor Barbara Thau writes, calling falling foot traffic a “dirty open secret” in the industry.

This has become a death knell to traditional retailers that have long depended on in-store traffic to keep sales afloat.

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Macy’s in Herald Square.

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Mallory Schlossberg/Business Insider

Retailers are now looking for ways to become “Internet proof,” Thau writes. It’s well-known that millennials are looking to buy experiences, so it shouldn’t be too surprising that malls are looking for ways to add things that seem like experiences – like gyms or restaurants, as Thau points out.

As further proof of this trend, Whole Foods’ latest venture, Whole Foods 365, is trying to turn its stores into a “hangout” destination.

Not all apparel retailers have caught on to that trend yet, though some brands have innately built community and experiences into their strategies.

Brands that have been able to translate shopping into experiences are the ones that are thriving – comparatively speaking, at least – in an otherwise difficult time. Lululemon hosts in-store classes and Nike hosts events like run clubs, both of which foster a sense of community.

Macy’s is trying to do something along those lines, too. The company has apparently realized that it needs to excite consumers to boost traffic.

Macy’s CFO Karen Hoguet said on a recent earnings call:

“Let me start with we absolutely agree with you that we need to work hard to make the bricks-and-mortar experience a lot more exciting, and we’re working on that and trying to test some concepts, one of which actually is the whole health and wellness.”

Macy’s is testing out a new prototype section of a store in Ohio that will make shopping more experiential and upscale, with personal shoppers and a spa.

The department-store giant has also launched off-price sections in its stores to help boost traffic, but it’s largely annihilated its reputation as a premiere retailer and signaled that there are other problems in the apparel industry, like incessant discounting.